Canada’s Premium Brands Holdings has concluded the year with a strategic acquisition, acquiring US-based Stampede Culinary Partners.
The transaction, valued at approximately US$664 million, focuses on the Bridgeview, Illinois-based company that excels in sous-vide cooking techniques for both meat and plant-based proteins. This move aligns with emerging trends in the food and beverage industry, particularly in premium food offerings.
Premium Brands plans to finance this acquisition with $512.5 million in cash and $150 million in its shares. Moreover, Stampede could receive an additional $100 million contingent on achieving undisclosed profitability targets within the next two years.
“Over the past couple of years, we have made significant investments in production capacity to support the growth of our market-leading branded and customized cooked-protein initiatives in the US,” stated George Paleologou, president and CEO of Premium Brands. “The acquisition of Stampede will further accelerate our growth in this market.” He emphasized that this deal would provide “significant unused production capacity” and enhance sous-vide capabilities.
The transaction is subject to competition authority approval and is expected to finalize by the end of January.
Stampede’s CEO, Brock Furlong, expressed enthusiasm about joining the Premium Brands family. He noted the potential to leverage Premium Brands’ resources and production capabilities to boost their business, especially in distributing innovative products from the Premium Brands ecosystem to a diverse range of foodservice and emerging retail clients.
According to estimates, the acquisition will lead to a mid-single-digit increase in adjusted earnings per share over the first full year, potentially rising to high-single digits when factoring in expected synergies.
To fund the cash portion, Premium Brands will utilize indirect share offers and bonds, selling US$325 million in public subscription receipts and US$108 million in convertible notes. Additionally, US$80 million will be sourced from existing credit facilities.
Stampede is projected to generate $936 million in revenue this year, along with $108 million in adjusted EBITDA, complemented by a net profit before tax of $17.9 million.
Premium Brands has continuously expanded its revenue and profit base through mergers and acquisitions. Earlier this year, they acquired Denmark Sausage, a premium sausage manufacturer in Arizona, for $21 million. Prior to year-end, they announced deals involving NSP Quality Meats, Casa Di Bertacchi, and Italia Salami, further solidifying their position in the food and drink business.
In the previous fiscal year, Premium Brands reported a 3.3% increase in revenue to C$6.47 billion ($4.68 billion today). While adjusted EBITDA rose by 6.2% to C$593.7 million, adjusted EPS saw a slight dip of 1.2% to C$3.98.
For the nine months ending September 27, Premium Brands saw revenue surge nearly 16% to C$5.58 billion, with adjusted EBITDA increasing by 10.7% to C$492.7 million. Adjusted EPS climbed 12% to C$3.28, although net profit decreased from C$84.2 million to C$28.8 million during the same period.
Concurrent with these developments, Premium Brands adjusted its full-year guidance for adjusted EBITDA to C$670-680 million, down from an earlier forecast of C$680-700 million.
In summary, by integrating Stampede into its portfolio, Premium Brands positions itself strategically within the evolving trends of the food and beverage industry, particularly in the premium segment. The company remains committed to enhancing its product offerings and expanding its market reach.
